The contribution of labour-intensive jute sector is enormous in the economy of Bangladesh. About half of the raw jute produced in Bangladesh are used by the existing 148 jute mills of the country (Bangladesh Economic Association, 2012). After India, Bangladesh is the second-largest producer of jute in the world, and the leading exporter of jute and jute products. Total global production of jute was estimated at 3.1 million metric tons in 2010. More than 96 per cent of global jute production is concentrated in India and Bangladesh, which produced 57 per cent and 39.3 per cent respectively of the world output in 2010. The area under jute harvest in Bangladesh was 466,800 hectares as against 790,000 hectares in India, with the former having higher yield and producing better-quality jute. Production capacity for jute (raw and processed) is currently higher than demand, indicating an opportunity to add value and manufacture products in demand at domestic and international markets (World Bank, 2013).
Bangladesh, however, is a bigger player than India in the export market. The former exports 60 per cent of its jute products, while India exports only 10 to 12 per cent of its output. Jute and jute products account for 39 per cent of Bangladesh's agricultural exports (International Jute Study Group) and it was 3.8 per cent of all exports in 2012-13 (Export Promotion Bureau, 2014). Export of jute products from Bangladesh stood at US$ 701 million in 2011-12 and US$ 801 million in 2012-13 (EPB, 2014). However, low value added and traditional products account for around 99 per cent of exports. Therefore, diversified jute products currently constitute only about 1.0 per cent of jute sector exports. The private sector accounted for 79.74 per cent of the total jute goods exports during 2011-12 fiscal year. Combined earnings of the public and private sectors from this export totalled Taka 50 billion or US$ 609.8 million (World Bank: Bangladesh Diagnostic Trade Integration Study, 2013).
FUTURE POTENTIAL: Bangladesh has a huge potential to diversify its jute products and realise higher value added from its rich jute resources. Despite the small share of diversified jute products relative to the jute sector as a whole, there is a wide range of products within the subsector.
Manufacturers and exporters of jute products are often involved in both traditional and diversified products. The predominant categories of Bangladeshi jute products are: yarn and twine (55.4 per cent), followed by jute sacks (30.5 per cent), while India's jute products primarily consist of jute sacks (64.9 per cent) and Hessian cloth (19 per cent). 'Hessian' is a cloth made from finer yarns which weighs half as much as sacks. Some Hessian is used to make finer sacks and bags and the rest for a wide variety of applications from wrapping plants to furniture and support-cloth for linoleum flooring.
Due to its ability to produce high volumes of yarn, Bangladesh is better positioned than India in the area of diversified non-traditional jute goods. Although India has the first-mover advantage in diversified jute products and perceived globally as more fashion-oriented compared to Bangladesh, the latter has not yet realised its value added potential in this sub-sector (World Bank, 2013). Diversified jute products with the greatest projected growth potential include decorative and household furnishings (+3,900 per cent), webbing (+233 per cent), market garden products (+233 per cent), felt (+200 per cent), jute carpets (+200 per cent) and geo-textiles (+100 per cent) (World Bank, 2013).
CHALLENGES TO DIVERSIFICATION: As the world's second largest producer as well as the leading producer of high-quality jute, Bangladesh has a unique advantage in natural resource for producing diversified jute products. The challenge for future success in this area lies in swift development of product designs and market linkages. With its advantage in labour cost compared to India and China, as well as existing export infrastructure, Bangladesh has all the potential to become an attractive manufacturing hub for diversified jute products.
Antiquated equipment, however, may negate the labour and cost advantages. Low output prices and insufficient marketing support cum extension services adversely affect diversification of jute products as well as export earnings from them.
GOVERNMENT MEASURES AND REQUIRED SUPPORTS: The Jute Diversification Promotion Centre (JPDC) was set up by the Government of Bangladesh in 2002 to sustain development of the jute economy through extension of potential uses of jute and jute products through diversification. As a professional organisation, the centre provides services to SMEs in designing, marketing and developing infrastructure for diversified jute products.
Bangladesh should develop a clear vision for the future of its jute industry and provide the industry with appropriate non-distortionary support. A development programme in partnership with the private sector can create a fabric bank of higher value-added jute and jute-based fabric, which can be used in hand-bags and other fashion items. Further assistance can include initial market research combined with partnerships with the buying community to track market and fashion trends in order to help remain on top of the global demand (World Bank, 2013).
The jute packing law enacted by the Jatiya Sangsad should be enforced strictly by the Government of Bangladesh as in India. This will result in increased domestic demand for jute and jute goods, and raise export, employment and output. Development partner financing may be considered to stimulate further R&D for the development of additional diversified fabrics and for reducing the cost of currently available high-end fabrics.
The Jute Research Institute, for example, has a pilot project on diversified jute fabrics and is exploring collaboration with some garments/textile units for large-scale runs. Issues like marketing, research and branding can be addressed on a regional basis with India and Nepal. If the South Asian countries get together and share marketing, branding and research costs under a regional approach, this can be helpful for all the parties.
Dr. Helal Uddin Ahmed is a senior civil servant and former editor of Bangladesh Quarterly. hahmed1960@gmail.com